UK economy posts 0.3% growth in November, beating estimates

The latest economic data from the U.K. has shown a surprising uptick in growth, with the economy expanding by 0.3% in November. This figure surpassed economists’ expectations of a more modest growth of 0.1%. The Office for National Statistics (ONS) reported that both services and production sectors experienced growth, with services up by 0.3% and production by 1.1%. However, construction saw a decline of 1.3% during the same period. Despite the positive economic data, the pound sterling remained relatively stable against the dollar, trading at $1.3433.

This growth comes after a slight contraction of 0.1% in October, which was attributed to factors such as a cyber-attack at Jaguar Land Rover affecting car production, as well as consumer and business uncertainty leading up to the Autumn Budget.

Jane Foley, head of FX Strategy at Rabobank, expressed relief at the latest growth figures, noting that the manufacturing sector’s strong performance likely had a positive impact on the retail sector and consumer consumption. Economists are optimistic about the U.K. economy’s prospects for 2026, especially as the Bank of England is expected to continue with interest rate cuts.

Sanjay Raja, chief U.K. economist at Deutsche Bank, anticipates a strong rebound in GDP in the first quarter of 2026. He pointed to improving survey data, signs of stabilization in the labor market, and expectations of increased household spending and investment. Deutsche Bank forecasts slightly lower GDP growth for the year compared to 2025, with quarterly growth projected at 0.35% quarter-on-quarter.

While there are some downside risks to growth projections, particularly concerning vulnerabilities in the labor market, overall outlook remains positive for the U.K. economy in the coming year.